}

Wednesday, May 24, 2017

LIKE A SNAKE EATING ITS OWN TAIL: Stuck In The Abyss Of Their Own Morass

Here's the complete story of the Grand Traverse Academy's $2.33 million dollar outstanding loan in pictures. No bullshit stories about chipping away at a ten-year-old loan or how the Michigan Finance Authority won't reauthorize a loan it never issued in the first place, or how Traverse City State Bank is not happy with the Grand Traverse Academy.

Instead, the truth as told by the documents, Part 2.

When you dig a ditch, lie in in, and cover yourself with dirt, you can't cry about how dark the world has gotten.








LIKE A SNAKE EATING ITS OWN TAIL: Stuck In The Abyss Of Their Own Morass

Here's the complete story of the Grand Traverse Academy's $2.33 million dollar outstanding loan in pictures. No bullshit stories about chipping away at a ten-year-old loan or how the Michigan Finance Authority won't reauthorize a loan it never issued in the first place, or how Traverse City State Bank is not happy with the Grand Traverse Academy.

Instead, the truth as told by the documents, Part 1.

When you dig a ditch, lie in in, and cover yourself with dirt, you can't cry about how dark the world has gotten.












Tuesday, May 23, 2017

MY BEAUTIFUL BALLOON (PAYMENT): Grand Traverse Academy Board Facing August 26, 2017 $2,341,536.74 Balloon Payment To Traverse City State Bank For September 2016 State Aid Note Loan; $120,205 Interest-Only Payments Made No Dent In Principal

BREAKING NEWS: The Grand Traverse Academy's $2.3 million dollar outstanding loan profiled in the May 17, 2017 Traverse City Record-Eagle, and described in the article as a “short-term loan from the Michigan Finance Authority” to cover unfunded operational expenses, was not (as the piece asserted) issued by the MFA.

The loan was made to the school by Traverse City State Bank, and the GTA did not borrow from the MFA last year (see GTA's MFA history chart below).




A Michigan Department of Treasury Security Report, received by the Department's Local Audit & Finance Division on September 14, 2016, reveals the $2,330,000 State Aid Note loan was issued to the school by Traverse City State Bank, with the GTA paying TCSB a $466.00 filing fee on September 7, 2016.

In addition, the Security Report (obtained from the Michigan Treasury department by a Freedom of Information Act request) included a schedule showing that $120,2015.36 of interest-only payments leaves a whopping $2,341,536.74 balloon payment due on August 26, 2017. 

The schedule, shown at left, shows the balloon payment is due on August 26, and that $120,205.36 of interest was due to be paid between October 2016-July 2017.

In the Record-Eagle article (previously addressed on this blog), a comment attributed to Full Spectrum Management's Mark Noss in this excerpt (The MFA, because GTA officials aren’t able to pay off the debt within one year, refuses to reauthorize the new loan, officials said. Private lenders previously willing to refinance the debt — like Traverse City State Bank — also have backed away from the charter school this year. “They’re not happy with us right now,” Noss added.) now appears even more misleading than previously judged—with Noss' intimations echoed by various GTA board members.

It was no secret, however.

A resolution was approved by the GTA board of directors during an August 30, 2016 special meeting. Lesley Werth did not attend the meeting, but the board engaged the Grand Rapids office of  Dickinson Wright to review the bond and obtain the required legal opinion.

So how did the Record-Eagle get it so wrong...and why didn't GTA board members Werth and Bourdkani contradict the fiction Mark Noss was spinning?

Anybody?

Monday, May 22, 2017

“REIMBURSABLE BY CUSTOMER”: GTA In The Red; Overambitious Expansion Plans On Hold; Noss On The Skids?

On May 4, 2012, current GTA Board President Lesley Werth was one of three board members who voted to approve a “Reimbursement Resolution” that was crafted to commit the Board to reimbursing its then manager, Steven Ingersoll, 12 percent of the school's revenue— “from its inception and going forward”. 

Werth, along with fellow board members Teri Stockwell and Larry DeYoung, effectively voted to reimburse Ingersoll for the management fee reductions he'd grudgingly accepted during the GTA's lean financial years in order to balance the school's budget. The resolution passed on a 3-0 vote, with the two remaining board members—Bruce Christensen and Mark Noss—skipping the meeting. 

Less than two weeks after that meeting, one of those three board members filed a massive bankruptcy petition, showing personal debts exceeding $1.2 million dollars. 

And roughly two years later, on August 1, 2014, the board's attorney, Kerry L. Morgan, sent two documents to Mark Dobias, an attorney representing Lake Superior State University. 

The documents had been sent to Morgan by current TCAPS school board member, Jan Geht, who still represents Steven Ingersoll. 

The documents were sent to Kerry L. Morgan on July 8, 2014, and reflected Smart Schools Management’s position that “Grand Traverse Academy owes it approximately $2.8 million in unpaid management fees going back a period of years”. 

Exhibit A was a proposed Settlement Agreement drafted by Smart Schools Management for adoption by the Grand Traverse Academy. 

Exhibit B was a resolution proposed by Smart Schools. Smart Schools Management's strong-arm agreement asserted that the GTA board, then headed by Ingersoll crony and covert business partner, Brad Habermehl, owed $2.8 million to Ingersoll, while acknowledging that SSM/Ingersoll may (emphasis on the “may”) owe the charter school $1.6 million. (The GTA does not owe Ingersoll $2.8 million, although some on the board still claim publicly it does.)

By approving the agreement, the GTA board would have recognized, according to the draft, the “hazards (and unwelcome publicity) of litigation and all the support that SSM has shown to the Academy over the years” when it agreed to “release SSM from any obligation to reduce the Non-Spendable Fund Balance of approximately $1.6 million in return for SSM’s agreement to release the Board and the Academy from any claim relating to the cumulative difference between the contractual management fee and the actual management fee (over approximately $2.8 million) that SSM may be legally entitled to as a result of the Reimbursement Resolution.” Unwelcome publicity? 

That sounds like it has my name on it! 

In addition, Exhibit A (the Settlement Agreement) stated that the “Board has been advised by SSM that it intends to donate to the Academy $1.6 million (or a portion thereof) as a charitable contribution in the future by the Board recognizes that SSM’s ability to do so hinges on the outcome of the dispute between Dr. Steven Ingersoll and the federal government.” 

(That so-called “dispute” resulted in three federal convictions on March 10, 2015, and a 41-month federal prison sentence for Steven J. Ingersoll. He currently rests on his haunches at FCI Duluth, a Minnesota prison camp.) 

But by signing the May 4, 2012 reimbursement resolution, Werth, Stockwell and DeYoung set in motion a course of actions that would later culminate in Steven Ingersoll's not-so-subtle July 2014 demand for an agreement that could have taken him off the hook for repayment of at least part of the money he later admitted under oath in federal court he owed the Traverse City charter school—nearly $5.0 million dollars. 

OK, it was $4,913,411, it you want to be precise! 

So I'm not surprised that the GTA currently finds itself again financially punch-drunk, mired in debt, a continuing hangover from the rapacious Ingersoll years. 

But I am surprised that Mark Noss' “if he builds it, the GTA will pay” scheme actually got as far as it did, with Full Spectrum Management's Noss able to generate two leases on behalf of his private property development arm, MDN Development, LLC, for the proposed 29,000 square foot addition over a two year period; and forced to conduct a ceremonial groundbreaking on March 18, 2016, smiling like a dazed chimp because an FSM whistleblower had revealed the financial relationship between Noss and Ingersoll to the board and officials at Lake Superior State University just two days prior; futz around furiously for financing before finally being forced to admit in March 2016 that he'd kept Steven Ingersoll on the FSM money teat for two years—and this charade is just now coming to an end? (Is it just me, or does this smell a little like collusion?) 

Where was the legal review back in 2015? 

Hell, the first document in this scheme—the initial lease agreement between the GTA and MDN Development—was signed on May 18, 2015! 

WTF, people?